Unchained - Bitcoin’s Price Is Way Up. And $48 Trillion in Wealth Just Got Access - Ep. 614

Starting point is 00:00:00 February will close as probably the largest monthly candle in Bitcoin history at $20,000 candle. So truly, it's been quite a wild ride the past, you know, a few days and weeks. Hi, everyone. Welcome to Unchained. Your no-hive resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto eight years ago, and as a senior editor at Forbes was the first mainstream reader reporter to cover Cryptofer. currency full-time. This is the March 1st, 2024 episode of Unchained. Uniswap makes it easier and safer than ever to access defy seamlessly across desktop and mobile. No more clunky experiences, just clean, simple,

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Starting point is 00:01:25 That's the powerful backing of Amex. Conditions apply. Today's guest is Alex Thorne, head of firm-wide research at Galaxy. Welcome, Alex. Hey, Laura, great to be back. Thanks for having me. It is a big week for Bitcoin. We're near the previous all-time high with Bitcoin trading at about 61-62K as of recording time.

Starting point is 00:01:48 It's of about 20% in seven days, and yet it doesn't feel like we're quite in the full throes of a bull market yet. So at this point, what would you say are the main drivers of this surge in price? Absolutely, the ETF flows have been a huge driver. I would say the primary driver of what we have seen. And frankly, they've been far outpacing what we expected. In fact, at the last time I was on your show, we discussed what we expected. And we said 14.5 billion in net inflows in year one. We said it was a conservative estimate.

Starting point is 00:02:18 And our methodology was conservative. But now you're looking at an ETF complex, Bitcoin ETF complex that's already had seven and basically half of that in under two months of launching. So about 7.1. billion last time I checked of net inflows into the Bitcoin ETFs. That's that's net of gray scale outflows. And and even in just the last, you know, 20 days even, we were up 20% or so. And by the way, Eath also about similarly, even slightly more. Actually, February will close as probably the largest monthly candle in Bitcoin history at $20,000 candle. So truly, it's been quite a wild ride the past, you know, a few days and weeks.

Starting point is 00:03:04 Yeah. And, you know, I definitely want to dive into all things, ETF. But we also, you know, like for Bitcoin's history, it's really been a retail driven asset. And so I was just curious how the long-term holders are reacting to this price increase. Are you seeing them sell or are are they hoddling? I would say about 75% of Bitcoin supplies currently held by long-term holders by, this is mostly GlassNodes metric of 155 days or more. But if you look at annualized, so like what we call the hoddle waves, like it's also largely in the hands of longer-term holders, one, two, three, or plus holders. We have seen just in this last couple days, which has really seen basically a small but parabolic, not small, but a small, but a small parabolic.

Starting point is 00:03:52 parabolic increase, right? Not like parabolic the way like, you know, December 2017 was, for example, but we have seen a slight transfer of coins from longer term holders to shorter term holders. But keep in mind also, some people are selling their Bitcoin to buy the ETF, like specifically. There are some early whales that would rather have an ETF form. So, I mean, I don't see that as problematic. And by the way, even when you look at that chart over multiple cycles, like the minor transfer, the minor dip in long term and increase in short term, It's not close to what you would consider a market top on those metrics, like historically, right? Because most parabolic moves are driven by net new entrance, right? Like people coming in and buying a lot. Again, think December 2017, right, November 2021. So they have to get the coins from somewhere. So it's often from earlier holders taking gains and selling to newer entrance. You've seen a tiny bit of that, but we're not close to what I would consider like a top

Starting point is 00:04:51 indicator at all. Yeah, and you wrote up this research note where you also talked about something called the MVRV Z score. Yeah. What is that? And what are you seeing there? This is a great metric. I mean, so the Z score sort of just transforms the metric into something you can look at as like an oscillating signal. But in general, it stands for market value to realize value. But think about market capitalization as a metric, right? It's just the circulating total supply of an asset times its last known price, right, multiplied by its last known price. So if you have 19.7 million, coins in circulation on Bitcoin and the current last known price is $61,000. You multiply the two together. You get over a trillion dollars. That's the market cap, right? Pretty straightforward. We all know that

Starting point is 00:05:31 metric. The realized cap is is quite interesting and it's a different way of valuing the network, right? So what we're doing instead of just taking the last known, all those coins, valuing them equally and applying today's price to them, we take each coin on the, at the price that it was last moved on chain in Bitcoin terms, each UTXO at the price it was created, right? So basically, if you buy a coin for $100 in 2012 and you haven't moved it since, it's sitting in your wallet, that coin only gets valued at $100, right? So, and we do that for the entire Bitcoin supply and come up with an aggregate number, right? And so that can, the reason you do this, the usefulness, is that it gives you an idea of Bitcoin cost basis across the entire network. So realize value is

Starting point is 00:06:16 lower than market cap, right? Realized cap should be lower, most likely, unless everybody bought their coins today or at the same exact prices today. By comparing a ratio of the two, we can get a sense as to whether historically speaking, Bitcoin is currently over or undervalued, right? So it's a great metric. And then again, we can transform it into more of an oscillator that shows us peaks and troughs in it, right? Rather than, but even just looking at, I would encourage people to take a look at realized cap in general, which is just a line like market cap. It's not a, it's not a, an oscillating metric. It's a very interesting concept personally. And by the way, you can also get realized price from that. So you can say, like, what should then the price be if you take that

Starting point is 00:06:56 realized cap and then divide that by the current total supply on every day of a time series. And you can actually see what the realized price might be, which is kind of the price of people's cost basis. It does get strange. And I do want to point out, like, we're talking about when the coins moved. Obviously, if I consolidate coins into my own control, like that I already own, then I haven't sold, right? So it relies on a heuristic that, you know, if the coin moves, it maybe was sold, I think is a fair thing. That has limitations, as the audience, you know, will know. And by the way, we'll have increasing limitations going forward because of non-monetary uses of Bitcoin, which are becoming more common. And also because of the ETFs, these ETFs among many things and impacts

Starting point is 00:07:39 that they will have, they will disrupt the use of on-chain data. Because when two, when shares of an ETF change hands, coins may not ever move on chain. So even things like, you know, addresses with a balance or like the length of holder times are going to all start to get a little bit janky, right? Because you're taking a large portion of Bitcoin supply, perhaps a much larger over time as they grow, and basically making them inert custodial, right? So that's going to impact the usage of the network and thus the analytics you can do off of it. But again, on this metric, we're not close to market tops either. And this is a very good metric, in my opinion, Overall, it doesn't require a lot of extrapolation.

Starting point is 00:08:18 The main heuristic is just the one that I said, which is that it assumes a move is effectively a change of hands when it may not be. But a lot of times it is. And again, we're just not close to market peaks on this. And I don't rely too heavily in general on on chain indicator type signals that are derived from on chain data, sort of market wide ones. But there are a few that I like, and this is one. Yeah, yeah. Just visually, when you look at it, you can see it's really down near. the bottom compared to certain times historically.

Starting point is 00:08:48 And then other times, you can tell it's definitely overpriced. Right, right, exactly. So you also mention how Bitcoin futures open interest right now is different from past times when the Bitcoin price was up. So what is it typically looked like when the Bitcoin price was at a previous all-time high and how is it different now? Well, in particular, like where we are in the so-called cycle is I think even very interesting because, you know, let's call it 52 days.

Starting point is 00:09:15 from the fourth having in Bitcoin, right? So that's just assuming that it happens on around April 20th, which is when it will happen on or around, right? We're guessing, but we'll say it's expected then. So 52 days before the second having, you know, Bitcoin was trading at $455, and that was 60% below its prior all-time high, which is about like 1,300 or so. 52 days before the third having, now think back to early COVID, right? that was because the third having was May 11th, 2020.

Starting point is 00:09:46 52 days before that, Bitcoin traded at $6,174. That was 68% down from the prior all-time high, which as our audience will remember was about 20,000 from December 17. So now we're 52 days out from the next having and Bitcoin's trading at 61,000 as we speak. That's like 10% down from all-time high, right? So very, very different looking than prior cycles. And, you know, I wrote this note because a lot of people are, people are actually on Twitter.

Starting point is 00:10:17 You're saying people talk about this. I've been asked about this. Like, is that bad? People are like, is that bad? Well, what if we like, top too soon, right? Does that mean the cycle will be shorter? Right. I mean, don't get me wrong.

Starting point is 00:10:28 I get it. Like, it's, we're all, not all, but those of us who are been following, including you for sure, been following this market closely for a long time, it's easy to get neurotic about things like, wait a second, are we supposed to go up after the having, not before? Like, isn't that like something that we all kind of have known for like 10 years? And I'm just here to say that none of that matters. And this time is different. And you can't underestimate the impact of, you know, the entrance of giant pools of capital through these new vehicles.

Starting point is 00:10:58 But I will say also the recent client action we're seeing. And like, think about this. Like, you have a wave of new demand that's driven by the access to new market access vehicles that is unlocking new giant capitals, pools of capital, $48 trillion in the U.S. is the wealth management and financial advisor, AUM. Almost none of that money has had historically any way to allocate to Bitcoin, not the closed-end trust, not the cash-hettle futures, not any real way, not there was no sub-accounts on Coinbase for an advisor to open up their things and do, right?

Starting point is 00:11:26 So that alone is a giant pool. And by the way, those still haven't even turned on yet, really. you're starting to see some announcements that they will or they're considering it and stuff like that. But that is leading to a wave of new demand that is smashing against a programmatically scarce asset of which, like I said, 75% is held by long-term holders. And many of those are diamond-handed zealots. Like, right? I mean, we know Bitcoiners. Like, people love their Bitcoin, right?

Starting point is 00:11:52 They want to hold their Bitcoin. They believe in it. It's not just like a stock that they own. It's a movement, right? So that is just a dynamic that is, well, I mean, And look, you can see what it's doing. I mean, we're already, again, like, we're basically, effectively, we've, when we traded at 64 this week, like, effectively, that is the all-time high.

Starting point is 00:12:12 Like, we weren't over 64 in 2021 for more than a day or two. So it's, it's, we're back. Yeah. Yeah. I, all these indicators are, um, really promising. And especially, you know, just the fact that we have this whole pool that hasn't had access before is I think the major catalyst. So in a moment, we're going to talk more.

Starting point is 00:12:31 about the ETFs, but first quick word from the sponsors who make this show possible. The UNISWAP protocol is the largest decentralized exchange, with billions of dollars in weekly volume across thousands of tokens within the Ethereum ecosystem. But UNISWP is more than just a protocol. Uniswap Labs builds tools to help users swap smarter, with easier, safer, self-custody products that provide users access to defy. Tap into UNISwap's market-leading liquidity from their world-famous web app, mobile wallet, and, coming soon, the UNISWR browser, extension. No more clunky experiences. Just clean, simple, and smart. Visit smarter.uniswap.org to get started. Did you know you can buy and sell crypto with tax benefits in an individual retirement account?

Starting point is 00:13:16 I trust capital makes this possible. But what does this mean? When you buy crypto outside an IRA, like on an exchange, you face taxes on gains. But in an IRA, like a Roth IRA, gains can be tax-free. I trust capital also has some of the lowest fees in the industry and 24-7 accessibility. Start now and maximize your retirement savings with I-Trust Capital. Back to my conversation with Alex. So as we've already mentioned, the ETFs are the biggest driver in this activity. And so, you know, we have talked a little bit about the kind of like fact that this is tapping a whole new constituency that hasn't had access before. But I wondered, you know, here we are.

Starting point is 00:13:59 about a month and a half out from the launch and we're seeing like kind of this first wave, I guess, of these different investors. Who do you think is part of this first wave? Because today, which is Thursday that we're recording, we got an announcement that Bank of American Wells Fargo are going to start offering Bitcoin ETF. So if they weren't part of the game earlier, then, you know, who do you think has been buying and who do you expect will make up part of the, you know, continued part of the wave? these after launch were really only available on retail brokerage trading platforms,

Starting point is 00:14:32 such as Fidelity and Schwab and whatnot, right? Like you're e-trade even for all I know. I'm not actually certain that all of them do. I know Fidelity did. But these are platforms, when I call them retail brokerage, it doesn't mean like small mom and pops, like, you know, hedge funds can trade on these things. Also family offices, high net worth individuals. So when I say retail, I don't, what I mean is they may not be like institutional entities.

Starting point is 00:14:55 and I also mean they're not necessarily advisor-managed accounts, right? You go to Fidelity.com and open up a brokerage account. Like you were able to buy almost on day one, right, these ETSs. So it's driven by those platforms. And when you hear about, like, say, big banks, like the ones you mentioned, like adding them to the platforms, I actually read that announcement. And they're really only adding them to non-advisor. They're kind of doing what Fidelity is doing.

Starting point is 00:15:19 They have their own brokerage platform, which lets people open up, you know, stock trading accounts. and they're adding these approved ETFs to the things you could buy there. I think the real unlock comes when the wealth management platforms affiliated with those banks and broker dealers. Again, Merrill and I think you said Wells Fargo, these are ones they have wealth management businesses. It's when the advisors who do fully non-discretionary accounts, as in like where you can't trade, but your advisor trades for you, those advisors, if they're not independent, if they're affiliated with a big bank or broker-dealer, they can only even choose from options that are allowed by their platform, right?

Starting point is 00:15:57 And they're quite strict on this, right? There's suitability issues. They have to wait. You can't just add a brand new vehicle. You've got to wait and make sure it works, right? And that there's not risks and stuff. So even if they want to add the Bitcoin ETFs, they have to go through a whole process. And I can't remember which, but one of these said that they were actually streamlined.

Starting point is 00:16:13 They've got so much demand that they're streamlining the review process from 90 days down to 45 days. But again, like, that there are even platforms, by the way, plenty of them that they might not allow something that's totally, trades totally fine, is totally legal and safe process-wise. They just don't like it. For example, there are some wealth management platforms that don't allow their advisors to put people into cannabis ETFs. Why? They don't like it. They don't want them to do it. Right. So there's discretion that doesn't exist. Now, if I'm Alex Thorne, CFA with like a storefront in my local town and I'm a financial advisor, I probably use an independent white label type platform like Fidelity Pershing Schwab. They offer like the back end for someone like me.

Starting point is 00:16:52 those are what we call independent RIAs. They are much more likely to have earlier access, but the big bank, I mean, the banks and BDs themselves are 40 of the 48 trillion that I talked about. And they really aren't here yet, but many have announced that they're like doing their process where they look at it.

Starting point is 00:17:10 Sometimes they call it seasoning. Even where it's available so far on Wells and Merrill in that announcement that you referenced, they are saying they'll let some advisor-managed accounts do it if they ask for it. And what that means is they're not able to solicit for this. That means that they can only offer it to the extent they are offering it at the moment on an unsolicited basis. That means they can't put it in sales decks and go out and sell that you should get into Bitcoin, right?

Starting point is 00:17:35 But if a client, you know, pesteres them enough, they might allow it. So we're not even there. Eventually we'll get to a place where major wealth management platforms allow their, not only add it to their advisor menu, but they also let their advisors go out and pitch it, right? And that's when you're really going to, then you're going to start having it. people at all these places explaining to investors what the having is and how what satoshi did i mean it's going to get really interesting it's one of the things i'm very bullish on for the having coming up isn't so much the like supply event which at this point obviously the impact of it decreases by half

Starting point is 00:18:08 theoretically every time and at this point on an absolute basis it's not going to be like that big of a supply shock in the scheme of things but what i'm bullish on is people learning about the having because one of the best ways to learn about bitcoin is to learn how what the having is and how it works And it's not just going to be people like me and you explaining it now. You're going to have people from BlackRock and Invesco like teaching. So it's going to be a huge marketing and educational event that will showcase, of course, one of Bitcoin's prime features, which is its programmatic scarcity. So if you're saying that we have, you know, about 40 trillion of the 48 trillion that you

Starting point is 00:18:44 mentioned had previously not had access to the Bitcoin ETFs, and they're kind of coming online and they're going through their processes right now, you know, how do you see that intersecting with the halving? You know, when you, like typically we've had this bull market after the halving, as we've talked about, it's already kind of started. So I don't know if you saw that JP Morgan came out with a report projecting that the Bitcoin price would drop to 42K

Starting point is 00:19:09 post-having after what they called the having euphoria would subside. Curious for your thoughts kind of on both that and just generally how you see all these different factors that having and then. Yeah, I'll take the JPM point first on the having and then we'll talk about like what's going to drive it going forward, including the having and and the turning on over time. By the way, that turn on for those platforms and when we, we do have a whole report on this where we argue, but we explain how it works and we make projections on how long it will take for the whole thing to turn on. And we're talking one, two, three years is what we looked at. But you're going to see a constant stream of announcements over the next three to 24 months that are such and such wealth platform is turning on access, right? Like, and, Some will happen sooner and some will take years, right? And that's how we, when we came up with our estimate for inflows, that's the primary driver. We held the amount that people choose to invest in Bitcoin flat.

Starting point is 00:20:00 We said 10% choose to do 1%. But what really changes is the amount of addressable AUM and that is driven by when these platforms turn on. So it's going to be a constant steady drip of these catalyzing headlines that such and such big platform is turning them on. And by the way, those headlines aren't just headlines. the underlying news is that new AUM is now accessible, right? So they're potentially inflow driving events. As to the having, I didn't see the report. I read the story in the block about the report.

Starting point is 00:20:30 And I would say it sounds like what they're arguing is that because the marginal cost of production will go up, basically. And Bitcoin tends to find the marginal cost of production and mining that Bitcoin should go down to meet that cost. And this is just an interesting argument to me. They're claiming a correlation between Bitcoin price and the average cost to mine a Bitcoin effectively. This is effectively the labor theory of value, which is widely discredited in a way of determining valuation, period, like I mean across all sectors and an economic thought. So I'm kind of surprised to hear that come from JP Morgan.

Starting point is 00:21:08 I will say that it's there's the, here's the driver. It's not the marginal cost of Bitcoin mining. It's flows, flows, flows. That is the driver of price right now. And as I've described, I think there's plenty of reason to believe flows will oscillate, but continue. I mean, not everyone has access yet. And like I said, it's going to take a while for them to get access, but they're going to be continuing to get access over time. Again, our entire analysis on this doesn't even assume any kind of greater uptick in Bitcoin adoption, just people who might want it now getting access to do it.

Starting point is 00:21:42 Right. So it's a very conservative analysis. And like I said, we said 14 and a half. billion in your one. We're already at seven. And it's been less than two months. So I think we'll probably end up coming in on the under there. So there's something interesting. You know, obviously this week we saw this huge run up in price. But then we had a little mini correction on Wednesday, even again on Thursday because I saw the price has ticked down a little bit over the course of the day. So I wondered what you thought accounted for that. You know, on Wednesday, we had things

Starting point is 00:22:09 like the coin like Coinbase going down or showing zero balances. I didn't know if you thought that had affected the price or if it was just people taking profit or what? Yeah, well, look, it's healthy. Let me just tell you this. The last three days, or Monday, Tuesday, Wednesday of this week where it was a parabolic move, right? You know, you went from 50 to 60 to 64 at one point, right? That's, you know, people need to chill. You don't, you want staircase up, you know?

Starting point is 00:22:37 You don't want elevator up can cause elevator down, right? We want something that's a more foundational base here. So I think it's totally healthy. Anytime you run like that, like some correction should happen, like in general. I wouldn't really, I'm not that concern right now as we speak. Like I said before, it's about 61,000.

Starting point is 00:22:54 You know, we were at 64K for about 30 minutes like when we traded up that high. We've been, I think, pretty consistently over the last 48 hours or so in the 61 or even 60 to 635 range. Like that's fine. You have to remember like the absolute numbers are going to start to get really wacky the higher this thing goes. You're going to see like a 1% decrease.

Starting point is 00:23:13 decreases could one day be like $2,000, right? Like, it's going to be. So I look, but I will say it has been quite volatile. I mean, this is a, I mean, you've got professional traders, then you've got giant inflows into these ETFs. And again, that capital is likely much more inert than, you know, fast trading crypto money. And it certainly isn't Bitcoin on an exchange, which may be exchange for ether, which may be exchange for, you know, doge coin, right? Like, so, like, I would say as the ETF AUM goes higher over time, volatility should decline because especially if a lot of it is end up being owned by advisor managed accounts. Advisors don't go in and day trade all their inclined accounts every day. They set targets and make theses and periodically may rebalance.

Starting point is 00:24:05 They may change the thesis at points, but again, not like date. They're not going to be like, oh, no, Bitcoin's. And to be clear, a lot of them want the volatility. because that's what helps keep like on a risk-adjusted basis. That's part of the thing that makes it work so interestingly as part of a portfolio. But again, it will decline because if you set a target, you know, we're going to put Laura in 59% stocks and 40% fixed income, but 1% Bitcoin. Well, if Bitcoin goes up a bunch, they're going to sell some down to get it back to 1%. But if it goes down a bunch, they're going to buy more to get it back up to 1%.

Starting point is 00:24:43 that has a very dampening effect on volatility. So, you know, but it has, we're not there yet. We're still in this phase where I think people are like, I mean, you're just seeing waves of demand. 21 of the last 22 days saw inflows into the Bitcoin ETFs. And the one day that didn't was a paltry like net minus 30 million. It wasn't like just happens to be read on the chart. Unfortunately, I can't say 22 days in a row because of that one little day.

Starting point is 00:25:08 But like on Monday, we had the third highest day of net inflows into them. And then Tuesday became the, third highest day because it was bigger than Monday. And then on Wednesday, it was the largest single day of inflows, right? So like, it's not decreasing. It's accelerating and the market is still trying to adjust to this. It doesn't really know how to. So some volatility is healthy. I think there will be corrections. There were like 20, there were like 7, 20 percent corrections or something in 2017, like as we went from 1,000 to 20,000. Like, it's totally normal and healthy. You should be, If you're interested in Bitcoin, it really should be because it's a long-term game-changing technology for humanity

Starting point is 00:25:45 and not because you know you're worried about a, you know, 5% move on a particular day. You said that in April. You expect that we'll get the first round of post-ETF launch 13F filings by institutional investment managers. What do you expect to see then? These are filings where people have to disclose their ownership or various things. And you'll be able to see them, by the way, by assets. So like Bloomberg and other platforms, the SEC, like you can go. go and look at a specific stock or

Starting point is 00:26:13 ETF, including now these, once their first quarter is closed, and see institutional holders who have filed saying that they hold the asset, I think we're going to see, well, we don't know what we're going to see. I mean, that's what makes it exciting from a research standpoint. We can't wait to find out, but I would not be surprised if we see major institutional investors.

Starting point is 00:26:32 Because again, you know, they can go on and buy, like most of these. Now, it's mostly the advisor platforms that can't, but like endowling. pensions, they can buy ATFs, most likely. And maybe they can't under their current setup, but it's not that hard. These are legal, regulated normal products like now. So I don't know. Maybe we'll see major family offices of some famous or wealthy person. It's hard to know, but there will almost certainly be some signal in there to be seen.

Starting point is 00:27:02 And you noted that all this money pouring into Bitcoin ETFs might dampen the previous tendency for highs in Bitcoin to lead to alt-coin season. So why do you? you, yeah, why do you expect that might happen? So I call this intra-crypto rotation or even intracrypto cyclicality. And I referred to this earlier. But what I mean is because you now have, you will have a growing portion of the investment that is done through these ETFs. Well, currently that's the only asset that has these ETFs.

Starting point is 00:27:29 So if you go on like, you know, your brokerage platform, you can mostly only get Bitcoin exposure today. Fidelity does offer Bitcoin and ETH, like as digital assets. You have to open a digital asset account. And if we get the ETH ETFs one day, if not soon, then I'm sure someday, then it will probably be like Bitcoin and ETH. But with Bitcoin alone, it's not, again, Bitcoin sitting on a cryptocurrency exchange where it's easy for you to go in and say, whoa, whoa, whoa, maybe I should sell my Bitcoin and buy ETH. And then when that tops, you know, maybe I should sell the ETH and buy like, you know, Altcoin XYZ. If you look at December 17 is one of the clearest ways to look at this, like Bitcoin tops in mid-December 17.

Starting point is 00:28:10 ETH then runs to all-time highs in January 18. And then there was this all season after that. And you can always see, right, some people in, you know, my friend Dan Matashefski at CMS Holdings calls this the hot ball of money. Like at some point, historically in crypto markets, we've gotten to these points where that ball keeps like sort of bouncing from one thing to the next, right? There was the sole Luna Avax trade. A lot of people remember from 2021 where we're sort of like, oh, what's next?

Starting point is 00:28:36 Let's find the next one. And then it was like, oh, that L one didn't pump yet. We should buy that one. that dynamic has been very clear. By the way, it's not just at the full cycle level. You even see this, you know, in smaller ways, microcosms of it when, say, Bitcoin runs up a bunch and then go sideways, then you tend to see other assets maybe play catch up,

Starting point is 00:28:54 like for many old seasons have historically happened. Because the capital, so much of it's going to be stuck on this platforms where, A, maybe held by longer term investors, such as advisor-managed accounts, or on platforms where there is no way to rotate, right? Like, it's likely that that will dampen is sort of my argument. And by the way, it will really dampen if Eath gets an ETH-F-2 because the two assets together, both market cap and narrative cover most of the crypto narrative in market, right?

Starting point is 00:29:22 Basically, right? If you love, you know, instant payments or internet money and store of value, Bitcoin gives you a lot of exposure to that narrative, right? If you like stablecoins, defy, NFTs, Web 3, anything like that, Metaverse, even, whatever we're talking about now is the public blockchain use cases, Well, ETH exposure gives you a lot of exposure to that as well. So it's like how far out, like it for most people, if you owned both of those proportionate to their market cap, it's a pretty good index on the entire space, then you really

Starting point is 00:29:50 done. So what? You're going to be like, well, I own Bitcoin Ether in my brokerage account. Do I really have to go and buy like this new layer one? Like, do I have to? I'm not saying they'll cease to exist, but that whole dynamic will dampen. All right. Last quick question.

Starting point is 00:30:01 So we talked about how everything's happening at a much quicker pace. So have you updated your end of your price projection? I don't. Let's see. So I don't love doing these, but I will say, like, I haven't updated. I will absolutely, I think you're crazy if you say you'd be surprised that we don't cross $100,000 Bitcoin this year. I mean, we're already at 61. I mean, like, it's not really that far. It's certainly not out of the realm of possibility. I think that's totally reasonable. And something 100K or higher before the end of the year is totally reasonable. I'll leave it at that. And frankly, I could be. wildly low, I think is probably, could go much higher than that. I don't, I, I, I'd be, um, you know, pleasantly surprised, but I wouldn't be like shocked to see that. It would be well in line with my personal thesis about Bitcoin overall. I mean, think about this, it's still about one-tenth or one-twelfth of the market cap of gold. I mean, like gold is, like, I don't know anyone that buys investment grade gold, really. You know, maybe, and honestly, my kids who are

Starting point is 00:31:02 quite young, like, when they're at investing age, I don't think they'll even, know what the word gold means, right? I mean, Bitcoin ETFs have had 7 billion of inflows and gold ETFs have had 3.7 billion of outflows since the Bitcoin ETFs launched. I think that tells the story. Oh, all right, Alex, this has been amazing. Thank you so much for coming on Unchained. Thank you, Laura. Don't forget, next up is the weekly news recap. Today, presented by Unchained contributor Michael Del Castillo. Stick around for this week in crypto after this short break. Pocod is the original and largest layer zero blockchain with over 2,000 plus developers. The anticipated Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem,

Starting point is 00:31:42 upgrading the infrastructure with 8 times higher transaction throughput and twice as fast block times, tailored core time for the needs of every protocol, trustless bridges to multiple chains, revised tokenomics with a token burn to reduce inflation, perfect for GameFi and DFi to build, grow, and scale. Get your one three ideas to market fast. Think big, build bigger with Pocod. Join the community at PogoDot.network slash ecosystem. slash community.

Starting point is 00:32:09 The scorebed app here with trusted stats and real-time sports news. Yeah, hey, who should I take in the Boston game? Well, statistically speaking. Nah, no more statistically speaking. I want hot takes. I want knee-jerk reactions. That's not really what I do. Is that because you don't have any knees?

Starting point is 00:32:26 Or? The score bet. Trusted sports content, seamless sports betting. Download today. 19 plus, Ontario only. If you have questions or concerns about your gambling or the gambling of someone close to you, please go to conicsontario.ca. Hello and welcome to this week's Crypto Roundup.

Starting point is 00:32:43 In today's recap, we delve into major developments, including Gemini's $1.1 billion settlement with earned customers, Sam Bankman-Fried's legal team advocating for a reduced sentence, and the technical glitch that briefly halted Avalanche's network. We also covered DoQuant's extradition challenges, uniswap's unitokin-surging following a new fee distribution proposal, a Texas judge's decision to, to halt a crypto mining energy use survey, micro-stratage's continued investment in Bitcoin, Uga Labs, enforcement of NFT royalties, and the Bitcoin Forex Withdraw Freeze. Thanks for tuning in to the weekly news recap. I'm Michael Doe Castillo, a Knight-Badgett fellow at Columbia University.

Starting point is 00:33:26 In a court filing, attorneys for Sam Bankman-Fried, the former CEO of Clapsed Cryptocurrency Exchange, FTX, proposed a prison sentence ranging from 63 to 78 months. The defense argued that this recommendation considers his moral character and philanthropic efforts, contrasting sharply with the 100-year sentence suggested by the pre-sentence report, which they labeled as, quote, grotesque, end quote. Bangman-Freed lawyers criticized the report's estimate of a $10 billion loss in the bankruptcy as unreasonable, emphasizing that their client's actions were not driven by, quote, greed or status, end quote. They contend that a lengthy sentence would unjustly terminate Bankman Freed's potential

Starting point is 00:34:07 to contribute positively to society, highlighting his upbringing and dedication to philanthropy. This plea comes in the wake of Bankman Fried's conviction on charges of defrauding investors through FTX and Alameda research in a case that prosecutors have described as one of the largest financial frauds in U.S. history. The court's decision on his sentencing is anticipated next month amid a backdrop of public and familiar support for a lenient approach, citing his moral character and the unfair portrayal of him as a villain in the media, or so they say. Supporters, including his family and former colleagues,

Starting point is 00:34:46 have also raised concerns about Bankman Fried's safety in prison, pointing to his non-violent nature and vulnerability due to his inability to interpret social cues accurately, they say. They argue that a harsh sentence would expose, him to undo risk and hardship, urging for a sentence that reflects his first-time non-violent offender status and the potential for victim restitution. Cryptocurrency Exchange Gemini reached a settlement with the New York Department of Financial Services, committing to return at least $1.1 billion to customers of its Gemini Earned program.

Starting point is 00:35:21 This moves comes after the program's third-party partner Genesis declared bankruptcy, leaving many unable to access their assets. James Seyfert from Bloomberg posted on X, quote, Wow, that's capital W, capital O, capital W. Holy cow, Gemini is saying that earned customers stuck in the Gemini cryptocurrency are likely to get 100% of their digital assets back in kind, end quote. Under the current potential settlement, I repeat all caps in kind. That's absolutely massive, again, all caps.

Starting point is 00:35:57 Apparently, he's a big fan of the caps. Superintendent Adrian A. Harris highlighted Gemini's, quote, negligence in conducting due diligence on Genesis, which was not regulated or licensed by the Department of Financial Services, leading to, quote, substantial harm, end quote, for earned customers. The settlement aims to ensure that affected customers recover their assets fully. Launched in 2021, Gemini Earned program allowed users to loan their crypto at attractive interest rates, but the initiative faltered when Genesis experienced a financial. financial meltdown. Doe Kwan, the embattled co-founder of Terraform Labs, may not be able to attend the start of his fraud trial in the United States scheduled for March 25. Despite his legal team's efforts, extradition complications from Montenegro have introduced uncertainties that could delay his trial appearance. Kwan, who is at the center of allegations surrounding the dramatic collapse of

Starting point is 00:36:52 Terra-USD and Luna cryptocurrencies in May 22, is charged by the U.S. securities and exchange. Commission with wire fraud, commodities fraud, securities fraud, and conspiracy charges. The collapse resulted in an estimated $40 billion loss across cryptocurrency markets. The extradition process has encountered several delays, partly due to appeals and the Montenegrin court system's procedural challenges. Kwan's preference for extradition to South Korea, where he also faces charges, has been overridden by a Montenegrin High Court ruling in favor of the extradition to the U.S. This decision has been contested by Kwan's legal team, citing procedural errors and the prioritization of extradition requests. David Patton, Kwan's lawyer, has indicated that despite the extradition delays,

Starting point is 00:37:42 Kwan does not intend to seek a postponement of the trial date, emphasizing his desire for an in-person appearance. The legal entanglements in Montenegro, including Kwan's arrest for traveling with forged documents, add complexity to the case, highlighting the broader implications for the crypto industry's regulatory landscape and investor trust. The Uniswap Foundation's long-awaited proposal to reward uni token holders with protocol fees led to a sharp 62% increase in the token's last value as of Friday. The initiative would introduce smart contracts to distribute fees to stakeholders. If implemented, annual revenues for uni holders could range between $61 million and $153 million. The move addresses issues of low participation and apathy in governance, with less than 10% of uni users used in voting.

Starting point is 00:38:37 The proposal is now under community review with an upcoming snapshot to measure support for potentially proceeding to an on-chain vote. Meanwhile, Frax Finance is considering a proposal similar to Uniswops aiming to share protocol revenue with VFXS token stakers pending community approval. In related news, Lido Finance's LDO token spiked 10% following a fake revenue sharing proposal posted in the governance forum, suggesting increased interest in such initiatives among DFI protocols, that is, assuming this can be taken at face value. Avalanche experienced a technical outage that halted block finalization for approximately five hours due to a code-related bug. The issue initially attributed to a new wave of inscriptions was later identified as the, quote, gossip-related meme pool management bug, end quote, according to a post on X by Kevin Sikniki,

Starting point is 00:39:39 co-founder of Avalanche developer Avalabs. This bug prevented the network validators from processing transactions efficiently, leading to a stall in the consensus mechanisms. So they say, the problem was resolved after validators updated their nodes, which addressed the bug and allowed consensus to return to normal. By noon, eastern time, the Avalanche team confirmed the network had resumed its normal operations, marking an end to the outage. The Texas Blockchain Council and Riot Platforms, a major Bitcoin mining company,

Starting point is 00:40:12 successfully obtained a temporary restraining order against the U.S. Department of Energy's emergency survey on its electricity consumption from crypto mining. District Judge Alan Albright of Texas ruled the, the survey described as a supply of, quote, sloppy government process must pause until further legal examination. The department aimed to collect proprietary information about energy use from crypto mining operations, citing concerns over the potential impact on the U.S. electric power industry amid Bitcoin's price surge and a cold weather forecast. This legal challenge argues that the Energy Information Administration, or EIA, acting on behalf of the Department of

Starting point is 00:40:54 of energy overstepped its bounds by not adhering to the Paperwork Reduction Act, which mandates a 60-day notice for such information requests. The companies involved contend that compliance would force them to reveal sensitive data under the threat of penalties, causing, quote, immediate and irreparable harm, end quote. Micro Strategy has further increased its Bitcoin reserves by purchasing another 3,000 bitcoins for $155.4 million, signaling continued confidence in the digital assets value. This acquisition boosts the company's total Bitcoin holdings to approximately $193,000 worth over $1.17 billion at the current market price, revealing what seems to be an impressive, unrealized profit margin. This strategy initiated in August 2020 has the

Starting point is 00:41:47 not only augmented micro strategies asset base, but also attracted significant investor interest. Amid this aggressive acquisition strategy, micro received a buy rating from investment banking firm benchmark with a price target of $990. The optimism is partly based on the expectation that Bitcoin's value will surge to $125,000 by the end of 2025, propelled by crypto market dynamics, including the impact of spot Bitcoin ETFs and the anticipated. Bitcoin-having event, which typically reduces the supply of Bitcoin, potentially driving up its price. Yuga Labs, the creator behind notable NFT collections, declared it will only support trading platforms that enforce royalty payments for creators, effective from Tuesday.

Starting point is 00:42:36 This policy will apply to 18 of its collections, including the other side coda and Moonbird's mythics. However, its most recognized collections, Cryptopunks, and Bored Ape Yachtes, Club will not fall under this new mandate due to the absence of a royalty filter in these collections. This decision comes amid declining royalty payments, a percentage of sales paid by buyers on secondary markets to NFT creators, and precedes NFT Marketplace Magic Edens launch on the Ethereum blockchain. Hong Kong-based cryptocurrency exchange BitForex abruptly halted user withdrawals without prior notice, following an outflow of approximately $56.5 million from its hot wallets. The cessation of withdrawals raised significant concerns among its users

Starting point is 00:43:23 who have encountered challenges in accessing their accounts and reported a lack of communication from Bit4X's team. On-chain sleuth, Zach XBT highlighted the exchanges, quote, suspicious activity, end quote, noting the substantial withdrawals just before the transaction process was stopped. This incident occurred shortly after the resignation of Bit4X CO Jason Lowe, adding to the uncertainty and speculation among the crypto community. Elsewhere around the internet in slightly more fun news, in a twist that reads more like a sitcom plot than real life, Sam Bankman Fried, the former crypto mogul turned inmate, is reportedly spending his time behind bars,

Starting point is 00:44:06 dishing out cryptocurrency investment advice. Known for his former high-flying days at the helm of FTX, Bankman Freed has found a new audience, so it would seem, for his insights. The prison guards. It'll be interesting to see whether or not that counts as giving investment advice. Despite his predicament, it seems Bankman Fried hasn't lost his passion for crypto market recommending Solana's token SOL to those keeping watch over him, or so reports say. While the courtroom drama unfolds with legal maneuvers aimed,

Starting point is 00:44:38 At securing a lenient sentence, Bankmanfried's casual crypto consultations serve as a lighthearted footnote to the saga. Whether his tips will lead to massive gains from the guards remains to be seen. But for now, Bankmanfried's pivot from CEO to prison crypto advisor is the talk of the cell block. And that's all and thank you so much for joining today. If you enjoyed this recap, go to unchained crypto.substack.com. that is Unchained Crypto.substack.com and sign up for their free newsletter so you can stay up to date with the latest in crypto. Unchained is produced by Laura Shen with help from Nelson Wang, Matt Pilchard, Juan Aronovich, Megan Gavis, Shawshank, and Margaret Curia.

Starting point is 00:45:25 The weekly recap was written by Juan Aronovich and edited by Uni Wong. I'm Michael Del Castillo and thanks for listening. is now a part of the Coin Desk Podcast Network. For the latest in digital assets, check out markets daily five days a week with host Noel Atchison. Follow the Coin Desk Podcast Network for some of the best shows in crypto.

Unchained - Bitcoin’s Price Is Way Up. And $48 Trillion in Wealth Just Got Access - Ep. 614

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